Dime Bancorp said late Thursday it had reached the end of a strategic review and that Warburg Pincus Equity Partners would invest $238 million in the company.
In addition, Dime's chairman Lawrence J. Toal, will step down. Anthony P. Terracciano, a long-time banker, will take over as chairman of the board of Dime, while Mr. Toal will stay on as chief executive officer.
The announcement raises questions about the future of a $1.9 billion hostile bid for Dime that was launched by Melville, N.Y.-based North Fork Bancorp earlier this year. In recent weeks, North Fork's chairman, John Adam Kanas, has repeated his commitment to either complete that transaction or see Dime sold to another suitor.
Mr. Kanas, reached for comment, said: "It's early. We want time to examine Warburg's investment. But obviously there is no end to the length that Dime's board will go to to perpetuate itself."
Dime also said it would commence a "Dutch Auction" in which it would buy back up to 12.5% of its common stock and distribute to shareholders its expected proceeds from a goodwill lawsuit against the United States.
Both moves, coupled with the Warburg Pincus deal, advanced Dime's effort to thwart North Fork's takeover. In a statement, Mr. Toal reiterated that the North Fork deal was "inadequate."
Mr. Toal, however, did not rule out the eventual sale of Dime. "We determined that a sale of the company in today's environment would not be in the best interest of our stockholders," Mr. Toal said in the statement.
To that end, Dime revised its stockholder rights plan, a move it said would "demonstrate our willingness to consider a sale at the right time and on the right terms."
Mr. Terracciano is currently vice chairman of American Water Works Co. From 1996 to 1997, Mr. Terracciano was president of First Union Corp. From 1990 to 1996, he was chairman and chief executive officer of First Fidelity Bancorp, a New Jersey banking company that was acquired by Charlotte, N.C.-based First Union in 1996.
"With this transaction, Dime's stockholders are being given two attractive alternatives. They can either tender into the Dutch Auction and receive cash value consistent with, if not superior to, the uncertain value inherent in North Fork's hostile proposal," Mr. Toal said, "or they can remain invested alongside Warburg Pincus."
